Thursday, September 22, 2016

"The priciest office space in the U.S. is in a quiet town in California"

Aydin Senkut started his venture capital firm Felicis Ventures in San
Francisco a decade ago. Five funds and more than $430 million later,
Senkut is ready to open an office on Sand Hill Road, alongside such
Silicon Valley institutions as Kleiner Perkins Caufield & Byers and
Sequoia Capital. But he’s going to have to pay up.

Located in Facebook Inc.’s hometown of Menlo Park, California, Sand
Hill Road has the most expensive office space in the U.S., even as the
startup market moderates, according to data from commercial real estate
firm Cushman & Wakefield. At an average of $129.91 per square foot
annually, it’s up about $6 from last year and exceeds the cost of
renting high-end offices in Greenwich, Connecticut, and on New York’s
Park Avenue. It is also far more than the $75.39 for comparable space in
San Francisco’s south Financial District, which saw a price
increase over the last year similar to its neighbor in the Valley, said
Robert Sammons, a regional director at Cushman & Wakefield.

While many VC firms are opening offices in San Francisco, Senkut’s
move underscores that tech investors are willing to pay a premium for
close proximity to other big firms, the companies that might buy or do
business with their startups, and the suburban homes of investing
partners. What Sand Hill Road lacks is vibrant street life, restaurants,
shops or access to major public transportation routes. On either side
of the roughly two-mile strip between Interstate 280 and Junipero Serra
Boulevard, where many of the world’s top VCs hang their shingles, sit
low-slung “woody walk-ups,” nestled among trees, rosemary plants and
parking lots.

Felicis Ventures, a backer
of clothing startup Bonobos Inc. and satellite maker Planet Labs Inc.,
is in the process of relocating from its office in downtown Palo Alto,
California, the second-most-expensive market in the U.S., according to
Cushman & Wakefield. The high prices stem, in part, from the growth
of Palantir Technologies Inc., a venture-backed company that has become a
major tenant in the area, along with the increasing number of venture
firms and startups there, including Wealthfront Inc. and Houzz Inc. The
San Francisco Business Times reported this month that Cloudera, a data
analytics startup,leased 225,000 square feet in the area.

Rent on Sand Hill Road
is generally costlier, but it can be easier to find larger spaces.
Felicis Ventures recently signed the lease on a 10,000-square-foot
office at 2460 Sand Hill Road, where Senkut plans to host big events for
his startups and investment prospects. He declined to discuss how much
he’s paying for the space. “Let’s be honest: It’s still a high rent,” he
said....MORE